Fortnightly - Balancing authoritieshttp://www.fortnightly.com/tags/balancing-authorities
enIndustry in Transitionhttp://www.fortnightly.com/fortnightly/2013/06/industry-transition
<div class="field field-name-field-import-deck field-type-text-long field-label-inline clearfix"><div class="field-label">Deck:&nbsp;</div><div class="field-items"><div class="field-item even"><p>Utility CEOs face disruptive trends.</p>
</div></div></div><div class="field field-name-field-import-byline field-type-text-long field-label-inline clearfix"><div class="field-label">Byline:&nbsp;</div><div class="field-items"><div class="field-item even"><p class="p1">Michael T. Burr</p>
</div></div></div><div class="field field-name-field-import-bio field-type-text-long field-label-inline clearfix"><div class="field-label">Author Bio:&nbsp;</div><div class="field-items"><div class="field-item even"><p class="p1"><b>Michael T. Burr</b> is <i>Fortnightly’s</i> editor-in-chief. Email him at <a href="mailto:burr@pur.com">burr@pur.com</a>.</p>
</div></div></div><div class="field field-name-field-import-volume field-type-node-reference field-label-inline clearfix"><div class="field-label">Magazine Volume:&nbsp;</div><div class="field-items"><div class="field-item even">Fortnightly Magazine - June 2013</div></div></div><div class="field field-name-field-import-image field-type-image field-label-above"><div class="field-label">Image:&nbsp;</div><div class="field-items"><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/1306-FEA1-NickAkins.jpg" width="671" height="900" alt="Nick Akins, CEO, American Electric Power: “Our organization needs to change to more of an entrepreneurial culture, versus the regulated model. That has to change for us. We’re very focused on the cultural shift to address the needs of the future, and make sure the customer experience is positive”" title="Nick Akins, CEO, American Electric Power: “Our organization needs to change to more of an entrepreneurial culture, versus the regulated model. That has to change for us. We’re very focused on the cultural shift to address the needs of the future, and make sure the customer experience is positive”" /></div><div class="field-item odd"><img src="http://www.fortnightly.com/sites/default/files/1306-FEA1-SWEPCOTurk.jpg" width="1500" height="774" alt="AEP subsidiary SWEPCO in 2012 commissioned the first ultra-supercritical coal-fired power plant in the United States, the 600-MW John W. Turk Jr. plant near Fulton, Ark." title="AEP subsidiary SWEPCO in 2012 commissioned the first ultra-supercritical coal-fired power plant in the United States, the 600-MW John W. Turk Jr. plant near Fulton, Ark." /></div><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/1306-FEA1-Tom-Shockley.jpg" width="908" height="1126" alt="Thomas V. Shockley, CEO, El Paso Electric: ‘The push from New Mexico and the enthusiasm here in El Paso has positioned us to have a quite a bit of solar generation for a company of our size. We’ll have 97 MW installed by the middle of next year; 5 percent of our energy will come from solar.’" title="Thomas V. Shockley, CEO, El Paso Electric: ‘The push from New Mexico and the enthusiasm here in El Paso has positioned us to have a quite a bit of solar generation for a company of our size. We’ll have 97 MW installed by the middle of next year; 5 percent of our energy will come from solar.’" /></div><div class="field-item odd"><img src="http://www.fortnightly.com/sites/default/files/1306-FEA1-RG9_Night.jpg" width="1500" height="1000" alt="El Paso Electric is adding 500 MW of new gas-fired capacity, in part to backstop solar energy. Its newest unit, Rio 9, is located in Sunland Park, N.M." title="El Paso Electric is adding 500 MW of new gas-fired capacity, in part to backstop solar energy. Its newest unit, Rio 9, is located in Sunland Park, N.M." /></div><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/1306-FEA1-Solar-4.jpg" width="1200" height="799" alt="El Paso Electric expects that within a year, 5 percent of its electricity will come from solar plants in New Mexico, including NextEra’s 5-MW concentrating PV array in Hatch, N.M." title="El Paso Electric expects that within a year, 5 percent of its electricity will come from solar plants in New Mexico, including NextEra’s 5-MW concentrating PV array in Hatch, N.M." /></div><div class="field-item odd"><img src="http://www.fortnightly.com/sites/default/files/1306-FEA1-S-Berberich.jpg" width="730" height="975" alt="Stephen Berberich, California ISO: ‘You get a lot of diversification from regionalization. The sun doesn’t come up in Arizona at the same time it comes up in California. The portfolio effect is very powerful.’" title="Stephen Berberich, California ISO: ‘You get a lot of diversification from regionalization. The sun doesn’t come up in Arizona at the same time it comes up in California. The portfolio effect is very powerful.’" /></div><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/1306-FEA1-ControlCenterFolsom.jpg" width="1500" height="1050" alt="PacifiCorp and the California ISO recently announced plans for PacifiCorp to begin using the CAISO Energy Imbalance Market, managed from a control center in Folsom, Calif." title="PacifiCorp and the California ISO recently announced plans for PacifiCorp to begin using the CAISO Energy Imbalance Market, managed from a control center in Folsom, Calif." /></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p>Whether you’re a CEO at one of the country’s largest investor-owned utilities or one of its smallest, you face many of the same market pressures. The same is true for executives at independent power companies, transcos, and system operators. But in each case those pressures carry different implications—and they call for different responses.</p>
<p>To better understand how today’s driving forces are affecting companies in different situations,<i> Fortnightly</i> spoke with CEOs at American Electric Power, the California ISO, and El Paso Electric. AEP is one of the country’s largest utilities, with a heavy reliance on coal, and differing market structures, regulatory requirements, and resource considerations among the many states it serves. El Paso Electric serves a sizeable patch of non-ERCOT Texas and southeastern New Mexico, and depends on nuclear and natural gas, with a fast growing component of solar energy. And in California, the ISO is tasked with managing the transition to a green future, with the country’s most aggressive renewable portfolio standard—33 percent by 2020. Their comments suggest the industry’s future is bright, despite a shifting and uncertain landscape.</p>
<h4>AEP: A Century Ahead</h4>
<p><b>Fortnightly </b>What do you see as the most important issues affecting your company’s future, and how are those issues evolving?</p>
<p><b>Nick Akins, AEP </b>For our company and the industry in general, there are some major challenges. One is obviously how we deal with capital deployment, particularly given the denominator of kilowatt-hours of sales that are stagnant or maybe even decreasing in the future. That drives us to focus on optimizing [our operations], versus determining where the next central generating station will get built.</p>
<p>We have to change our view of what resources are available—not just central generation but also distributed generation (DG). The industry needs to be cognizant of new technologies that are evolving. And in our industry’s history there’s never been a greater need to focus on customers’ expectations, and on their changing energy use patterns. </p>
<p>We’re focusing on T&amp;D infrastructure development. To reinforce the existing infrastructure and [accommodate] resources for the future, you’re talking about $2 trillion that’s needed over the next two decades. And utility companies today are BBB credit quality versus A- and AA-rated 20 or 30 years ago. That drives a different financial structure. </p>
<p>AEP is focused on separating out our generation. Our model is moving toward a competitive environment. I’m not sure about that [trend]; it’s gone back and forth based on conditions in the industry. But we need to be able to function in both environments. That means our organization needs to change to more of an entrepreneurial culture going forward, versus the regulated model. That has to change for us. We’re very focused on the cultural shift within AEP to address the needs of the future, to address resource optimization, and focus on areas of growth with discipline. Our culture needs to focus on activities that make sure the customer experience is positive.</p>
<p>It’s amazing to me to see the amount of change that’s occurring, and how quickly it’s occurring. When I started my career 31 years ago, it was just about determining where the next central generating station would be built to meet growing demand. Now, consumers’ needs are changing, resources are changing, not just generation but also transmission and smart grid applications associated with efficiency and management of consumption. Those areas are a challenge for our industry as we plan for the future. What part of that future are we as a business going to be involved with? We will be involved with technologies as they change. Will we continue with a no-regrets type of infrastructure development that’s conducive to what the future holds? Those are key questions we need to focus on answering.</p>
<p>We’re discussing with customers and regulators what their preferences are. That’s the best chance of getting recovery for the investments we’re making, and the allocation [of resources] between generation, transmission, and distribution. When you have a line of sight to what your customers and regulators want, you can address the ratemaking issues. What will we do if load continues to be stagnant? We have to make choices.</p>
<p>In Kentucky, at the Big Sandy coal plant, Clean Air regulations would require us to put a scrubber on an 800-MW coal unit. It was a choice between a 30-percent increase in rates to customers, which our industrial customers certainly had concerns about, versus retiring that generation and putting new resources in place, which could mean repowering with natural gas—a resource that wasn’t available before. Those kinds of decisions have to be made from a ratemaking, cost-recovery, and financing perspective. We need special riders to address certain issues—recovery for construction work in progress (CWIP), for example, and other rate formulas that reduce the effect on customers. </p>
<p> </p>
<p><b>Fortnightly</b> What’s your view on the expanding role of natural gas as a power fuel?</p>
<p><b>Akins</b> At AEP we believe strongly in a balanced energy portfolio that includes everything. You can’t go all the way to a specific resource without having a dramatic effect on what customers pay, and the reliability of the grid, and everything else. We’ve been heavily bent toward coal for 106 years. We see our coal footprint waning. It’s moving back from 65 percent to less than 50 percent coal by 2020. We see natural gas moving up, and we’ve already started the process with fuel contracting and generation available to go back and forth between resources, depending on coal and gas prices. It’s an advantage to have that type of diversity. We’re doing windpower contracts and other renewable energy contracts. But it’s really natural gas that will be the primary driver as we go forward, in terms of development. </p>
<p>We put in 5,000 MW of natural gas facilities in the last five years. Last year the capacity factors went up dramatically for our natural gas units, because we have the gas contracting capacity. And we’re also the second largest inland barge carrier, so we have the capacity to bring in coal. When gas prices go up to $5.25 per MMBtu for example, that’s when coal will slide back in and get fully utilized. Last year we had coal-to-gas switching, and this year we have gas-to-coal switching. If you have a balanced, diverse supply, you can achieve that for customers. But if you go all the way to gas—well, the quickest way to $8 gas is for everyone to buy $4 and $5 gas. That can happen, so you need to temper your movement toward gas. </p>
<p>The AEP service territory is well positioned to take advantage of the shale gas play, because many of those opportunities are within our territory. The Utica, Haynesville, Fayetteville, and Marcellus shale formations are all within our footprint. So we have the ability to look at resources in a different way.</p>
<p>The other factor is transmission. AEP has the largest transmission system in the country. We’re continuing to advance transmission around further optimization of resources. We have some very unique characteristics, but at the same time we have opportunities to develop a very vibrant resource mix.</p>
<p> </p>
<p><b>Fortnightly</b> When we last spoke (<i>see “</i><a href="http://www.fortnightly.com/fortnightly/2011/11/battle-lines-2011-law-and-lawyers-report"><i>Battle Lines: Generators fight back against EPA regulations</i></a><i>,” November 2011</i>), AEP was concerned about EPA’s pending Clean Air regulations, such as Utility MACT. Since the 2012 elections many questions about the rules seem to have been resolved. How do the rules now affect plans for AEP’s generating fleet? </p>
<p><b>Akins</b> We were thinking we’d have to spend $6 to $8 billion on retrofits for our existing generating plants. But EPA listened to a couple of the things we talked about with regard to the MACT rule, and that reduced our estimate to $6 to $7 billion. Also we find that now we’re able to use dry sorbent injection instead of full scrubbers in some areas, and that will further alleviate the cost. And we’ll be replacing some coal units with gas-fired generation. So now we’re looking at spending $4 to $5 billion. </p>
<p>We continue to optimize technologies, and we’re making adjustments to our plans for specific generators. At Big Sandy and other units, we made decisions to retire instead of making investment, because when you take the low price of natural gas and the capital cost of new gas-fired generation, it compares favorably with some of the equipment that you’d install to keep coal units running. For those fully controlled units that survive, they’re very efficient, larger units. </p>
<p>We made the argument that we have to look at the reliability of the grid. Early on we said there were issues with reliability in specific localized areas, and that’s been shown to be true. EPA and others have had a lot of discussions about how quickly the rules would affect some areas, and that’s helped in terms of working through processes to protect the reliability of the grid. Also there’s been a slightly more moderate approach at EPA. Congress is discussing the confirmation of Gina McCarthy as the new EPA administrator. Our discussions have indicated she’s an aggressive person, but she’s reasonable, and we’re hopeful that EPA will continue to see that there are areas where we can work together to achieve advances. </p>
<p>So far this industry is already on track to nearly achieve the greenhouse gas (GHG) limitation that was proposed in the Waxman-Markey legislation several years ago. That bill would’ve required a 17-percent reduction in GHG emissions by 2020, but because of natural gas, the economy, and efforts of utilities, we’ll achieve a 16-percent GHG reduction by 2020. We continue to see technical advances happening, and that’s all we need—along with the ability to work on the timing of rules being imposed, to make sure they’re reasonable. </p>
<p>I’m hopeful that we’ll end up with an EPA that focuses on reaching out and understanding the issues. Previously, I don’t think there was an appreciation of how tightly connected our grid is, with constraints in certain areas, and how the timing of implementation would affect reliability. With processes that include everyone who is responsible for ensuring that, from state regulators to FERC, NERC, and the RTOs, we’re able to make progress. </p>
<p> </p>
<p><b>Fortnightly</b> AEP recently announced plans to separate some of its generation resources. What’s behind that decision? </p>
<p><b>Akins</b> It was predicated by the state of Ohio moving toward deregulation. They had a deregulation bill in place for 10 years or so, but they didn’t want AEP to go into an unregulated environment because our prices were lower than those in deregulated areas. In the last year or two, with a governor and a new commission focused on moving toward competition, we’ve moved in that direction as well. It’s about being responsible to the areas where we do business. </p>
<p>So we’re going through the process of corporate separation of our generation, at least the Ohio portion, to an unregulated subsidiary. AEP remains a regulated utility, and that’s what we want to be. Our intention of moving our generation to an unregulated affiliate wasn’t a preference, but something we’re doing as a result of the Ohio requirements. And we’re going to make the most of it. We’re very focused on our wholesale trading shop that does business with municipal and cooperative customers for long-term contracts. And with our retail organization, BlueStar Energy, we’ll focus on marketing to customers in various jurisdictions. It’s not meant to be a national retail player, but one that participates in those parts of the country where we can market our unregulated generation. As a regulated utility company, we intend to have our unregulated generation as hedged as possible, and looking quasi-regulated, with FERC-based contracts, retail contracts, or participating in auctions. That’s the direction we’re going. </p>
<p>Our corporate separation has enabled us to delink our Eastern pool. It was a convolution of resources that met our customers’ needs in an entire region, but it also took away our line of sight to the different needs of different states. They were saying ‘Do we want to move toward energy efficiency, or develop coal, or new natural gas resources?’ Those are different preferences, and our operating model needs to be cognizant of that.</p>
<p>As technology is changing in the meantime, our unregulated generation business can be used as a platform for advancement of technology based on customer preferences. We’re learning a lot, and it could change the way we do business in the future. We’re enthusiastic about the possibilities.</p>
<p> </p>
<p><b>Fortnightly</b> Earlier you mentioned distributed generation. What’s your view on the growth of DG, demand response, and other distributed resources?</p>
<p><b>Akins</b> In our service territory we’re generally a low-cost provider. We haven’t seen the amount of DG here that some other areas have seen, like the Northeast and California. Our rates are less than half what theirs are. That gives us time to think about the future. </p>
<p>I don’t think you can stick your head in the sand. Over time there will be more dependence on DG, and that will change the way we operate our grid. You have to think about it in terms of planning the grid and what businesses you want to be involved with in the future. That’s something our company is focused on at this point—developing a strategy for the future. Yes, it’s a challenge, but it’s a distinct opportunity. We need to be in a position to take advantage of that opportunity.</p>
<p>From a microgrid perspective, it’s centered around community energy storage. We’re very focused on battery technology. We were one of the first utilities to look at large-scale storage, with sodium-sulfide batteries. And through our smart grid energy storage pilot, we looked at lithium batteries for neighborhood support. There are some supply-chain issues we need to address, but we continue to advance on those fronts. We keep seeing the cycle of battery advancement changing, with more frequent advances. As we progress, we’ll be looking at solar technology to advance it, and of course the efficiency of the grid itself. Through our smart grid pilot, we looked very closely at integrated volt-VAR control technology to address power efficiency. It’s a matter of fully understanding the scale at which you can put these projects in place, and capturing the benefits—and how you can pay for them. </p>
<p>We have a 106-year history of being first in several areas. We just put in the first ultra-supercritical coal-fired power plant. We have a patent pending for a new type of transmission line. We’re putting venture capital into various technologies, as a window to see where they’re going. I’m very focused on that, and it’s something our industry as a whole needs to be focused on as we devise our path into the future. </p>
<p>We’ve moved from the last few years from being a company that focuses mainly on generation—and deployment of capital on generation—to a company that’s more focused on development of infrastructure, including transmission and technologies that continue to advance the customer experience. That’s a transition that AEP is very focused on making. </p>
<h4>El Paso Electric: The Sun City</h4>
<p><b>Fortnightly</b> What do you see as the most important issues affecting El Paso Electric’s future, and how are those issues evolving?</p>
<p><b>Tom Shockley, El Paso Electric</b> We’re a very traditional, legacy utility company. We make electricity, transmit electricity, and distribute it to our customers. We bill our customers based on a traditionally regulated environment. We’re different from utilities in a whole lot of areas, and that drives a completely different type of vision about where your risk might be, and the way you go about getting recovery of costs.</p>
<p>We live in an area that takes pride in being known as “The Sun City.” We’ve got a lot of sun, and as a result solar is the most popular form of renewable energy. In fact it’s about the only renewable resource in the area we serve that’s gotten any traction. Obviously there are areas in Texas and New Mexico where the wind has been prominent as a renewable resource, but in our area solar has received the most attention.</p>
<p>In New Mexico they’ve had some aggressive state legislation that has promoted the growth of renewables fairly aggressively, and so our area in southern New Mexico has over the last two to three years aggressively added solar resources. We now have 47 MW in four different installations in southern New Mexico, and we signed a contract for 50 MW more that should be online by May of next year. So the push from New Mexico and the enthusiasm here in El Paso has positioned us to have a quite a bit of solar generation for a company of our size. We’ll have 97 MW of installed capacity by the middle of next year, and our total installed generation is about 1,800 MW. So within a year, 5 percent of our energy will come from solar plants in New Mexico. We have a renewable energy requirement that ramps up to 20 percent by 2020, and we’re staying ahead of the requirement.</p>
<p> </p>
<p><b>Fortnightly</b> I understand EPE relies on nuclear power for a large share of its baseload supply. How do you plan to manage the variability of solar generation on your system?</p>
<p><b>Shockley</b> About 45 percent of our capacity is from the Palo Verde nuclear plant, and clearly that’s base-loaded virtually all of the time. But all of the generation we own in the El Paso and southern New Mexico service territory is natural gas-fired. We have a challenge with peak loads versus minimum loads, and what to run and what not to run. Our operators have been doing it for a number of years, and they’re very good at it. We can cycle the units we need, and we have a capacity expansion plan that will give us more flexibility to respond to renewables coming onto our system, especially solar. We operate aeroderivative gas turbines that can start and reach full output in about 10 minutes, and then they can come down quickly as we come off peak. </p>
<p>Obviously solar is only available during the day. Fortunately for us, our load is higher during the day than it is in the evening. It’s not a perfect match; we have a late-peaking load, and our solar generation starts up early in the morning and on a clear day stays fairly stable until late in the afternoon. Some days you have clouds come over and you don’t get the output you do on other days. We’ve shaped our generation expansion plan to give us just under 500 MW of fast-ramping capacity that will help us to manage that situation. We just finished one unit this spring, and we have additional units scheduled for late 2013, and in 2014, 2016, and 2017.</p>
<p>We also have a very small amount of jointly owned coal, at the Four Corners station in northwestern New Mexico. That’s only about 107 MW [of a 2,040-MW plant]. In the Southwest, the implementation of new EPA rules is having a dramatic effect on coal usage. Coal plants are being retired as part of efforts to meet total emission requirements. We’re going to see a lot of generation retired that might not be totally depreciated, and we’ll see a lot of costs to replace that generation, probably with gas-fired plants. With EPA rules now, I think it’s impossible to get a permit [for a new plant] to burn anything but natural gas, because coal can’t meet the greenhouse gas requirements. Those of us in a regulated legacy environment always worry about fair treatment as you try to recover your costs. Also we have rate-lag issues when you finish large construction projects.</p>
<p>The old challenges are the ones we still worry about, and the new environmental issues are unfolding. We’re fortunate to have such a small sliver of our generation from coal, so the effect on us will be fairly small. Our partners are now in negotiation for fuel supply and are considering extending the life of the Four Corners plant. As we get it sorted out, El Paso Electric would like to exit our portion of the plant. </p>
<p> </p>
<p><b>Fortnightly</b> What’s your view on the expanding role of natural gas as a power fuel? Are you concerned about over-reliance on gas as it serves an even larger share of your load?</p>
<p><b>Shockley</b> I don’t have concerns about that. I follow a lot of the literature about what’s happening in our technical capabilities for extracting energy from shale, and it seems like it’s virtually every place in the U.S. Having said that, I am 68 years old and my first job was in a fuel department in the ’70s. We had firm contracts for 25 cents and within a year it went to over $2 and became regulated at the federal level. We realized then that fuel diversity was the best way to go. I remember that very well, but it seems to me that we have a very sustainable period of time with gas—maybe not as cheap as it was a year and a half ago, but at a reasonable level. And when the price goes up it will promote additional development.</p>
<p> </p>
<p><b>Fortnightly</b> As a vertically integrated company that operates in the Western Interconnection, and not in an RTO or ISO, what’s your perspective on the direction FERC has been taking with new rules like Order 1000? </p>
<p><b>Shockley</b> The Western Interconnection is under the same regulations, but it’s perhaps not affected as intently as some places in the East for example. It certainly is a noble effort to create fairness in the marketplace, and we all will try to support that to the extent we can. But the complexity of having a competitive wholesale market and a non-competitive retail market can be very complex, with regard to the way you operate the transmission system. Internally, certain employees can’t talk to other employees. It gets bizarre, the rules you must have in place to make sure you uphold the principle of making the wholesale transmission system something that’s there for everyone who wants to use it. It’s something we’ve had to learn, to apply the rules correctly. Working with different customers and generators, and providing access for point-to-point sales, is something to stay focused on to make sure we abide by the rules and intentions of FERC creating an open market.</p>
<p><b>Fortnightly</b> El Paso Electric recently cut the ribbon on a new microgrid at Fort Bliss. What’s your view of prospects for microgrids and other distributed energy resources, and their effect on the industry? As the Sun City, El Paso might see the consequences of distributed solar sooner than other locations.</p>
<p><b>Shockley</b> There’s an issue of semantics here. I’m not sure that if you said “microgrid” to 10 different utility folks they’d all have the same thought in their minds. </p>
<p>With regard to Bliss, they’re trying to move the base to a net-zero requirement. I think the perception is it’s a way to operate in an emergency, but not a long-term solution. I can’t ever see that it would make any sense at all to lose the reliability of a larger grid in normal, non-hazardous times and put a microgrid in place of that. In a state of emergency, having the ability to isolate part of your load and serve it with distributed resources in an island mode could make sense. </p>
<p>One thing that people aren’t aware of is that for the vast majority of the solar installations that go in, they’ll only operate with a live grid. If they were isolated, they couldn’t continue to contribute power unless they were specially ordered that way, and that has an impact on cost and configuration.</p>
<p> </p>
<p><b>Fortnightly</b> Do you have a net-metering provision in your service territory?</p>
<p><b>Shockley</b> Yes, we have net metering based on the monthly bill. Texas doesn’t, statewide, but the four legacy utilities in the state have an opportunity to implement rules specific to our area. One rule that we implemented two years ago to support DG—solar primarily—was net metering on a monthly basis. We meter in and out, and if they give us more than we give them, we pay for the excess at avoided cost. Short of that we give back everything they gave to us to offset the bill we charge them.</p>
<p>It isn’t a problem for us right now with the amount of rooftop solar that we have. From a philosophical ratemaking perspective it could grow to be a problem. Recently I read that the San Antonio municipal utility decided it’s getting to the point that it’s pushing too much of the distribution cost burden onto folks that don’t have rooftop solar. [<i>At press time CPS Energy announced it would delay by one year its plan to replace its net metering program with a new tariff that provides about half the price for rooftop solar generation.–MTB</i>] As we look at the effect on our total customer base, we have to be sensitive to those who want solar and also those who don’t want it or don’t have the means to get it. If it gets to the point where it’s unfair, we’ll have to look at it.</p>
<h4>California ISO: Leveraging Renewables</h4>
<p><b>Fortnightly</b> What do you see as the most important issues affecting the future for the California Independent System Operator (CAISO), and how are those issues evolving?</p>
<p><b>Stephen Berberich, CAISO</b> Clearly the biggest challenge or agenda is bringing renewables onto the system as reliably and cost effectively as we can. We’re looking for ways we can actually leverage them up. Spain uses a 1-for-1 backup strategy: 1 MW of traditional generation for every megawatt of renewable generation. That’s not a very cost-effective approach. We’re looking at creating a very flexible fleet so you can leverage up far more renewables.</p>
<p>Modernizing the fleet is the most important thing for leveraging more renewables. Some renewables can help too. You want the backup fleet to start, stop, and ramp up quickly, and to produce the lowest PM (particulate matter) emissions possible [in spinning reserve]. That’s important. You don’t want an over-generation situation, so you need flexible plants.</p>
<p>The other thing is you get a lot of diversification from regionalization. The sun doesn’t come up in Arizona at the same time it comes up in California. So the portfolio effect is very powerful. Having a regional portfolio is something we’re working to advance.</p>
<p> </p>
<p><b>Fortnightly</b> PacifiCorp and CAISO recently announced plans for PacifiCorp to begin using the CAISO Energy Imbalance Market (EIM). But PacifiCorp won’t actually become a CAISO member, and it will retain control of its assets. How will that work? What’s behind this move? And what does it mean for the future CAISO footprint? </p>
<p><b>Berberich</b> Outside of California, much of the generation in the West is scheduled on an hourly basis. That doesn’t work very well for renewables. We have the ability to dispatch every five minutes. That’s a powerful tool for integrating resources. PacifiCorp sees that—with more efficient dispatch in their footprint, and also with optimized California assets, we’ll get multiple bangs for the buck. PacifiCorp will be acting as a buyer and seller, but won’t be bringing its transmission assets into the grid. </p>
<p>There are benefits of optimized transmission assets too. Consolidating balancing authorities in the West seems inevitable. I’m not sure of the exact number right now—37 or 38 balancing authorities. That’s just not a tenable situation, given the higher level of renewable resources. What you’re seeing is the world is moving toward more renewables, and it’s just too difficult to comply when you’re operating a small balancing authority. Inevitably there will be consolidation. PacifiCorp sees that, but decided to take the initial steps of using the market platform for a number of reasons. It’s a good way to start.</p>
<p>The EIM will go forward on two tracks. The first is an implementation track, making sure we’ve done everything we need to do in our system. Largely it’s around modeling. Critical to five-minute dispatch is to model the system, optimize it, and build the PacifiCorp model into our system. The other track is a stakeholder process, designing how the EIM will work to meet PacifiCorp’s needs while not precluding others from joining the EIM as well. It will come together with a FERC tariff filing for the EIM. We hope FERC will act on that and we anticipate implementation in the fall of next year.</p>
<p> </p>
<p><b>Fortnightly</b> What’s your view on the expanding role of natural gas as a power fuel?</p>
<p><b>Berberich</b> California has led the nation on the use of natural gas. We’ve phased out almost all coal-fired capacity in the California system for some time now. LADWP has some coal, but it’s not in our footprint. </p>
<p>I’m aware of the commodity risk issue associated with reliance on a single fuel. It’s clean and it seems increasingly abundant, but you must have a portfolio of resources to reduce the single-fuel risk. I think in the future that risk will become greater here in California and across the nation. We have to look at the supply side of the equation—the natural gas system—and make sure it’s robust, resilient, and secure—and that it’s designed and planned to meet the long-term needs of the power system. </p>
<p>As you ramp gas-fired generation up and down, you put stress on pipelines, and that could become an issue. We’re working closely with gas companies. We’ve given them our scenarios for the electric system through 2020, and they’re looking at possible issues with pipelines—particularly for PG&amp;E. Also the Western Electric Industry Group is working on a study of gas supply.</p>
<p> </p>
<p><b>Fortnightly</b> Distributed energy resources—notably rooftop PV, demand response, and microgrids—are beginning to have a disruptive effect in some utility territories and power markets, most notably California. What’s your view of distributed energy resources and their effect on the industry?</p>
<p><b>Berberich</b> Should we be concerned about DG? I wouldn’t say ‘concerned’? I think it’s the march of technology, and we ought to embrace technology. If that means some current business models no longer exist, then that’s what it means. AT&amp;T’s landline business dried up and was replaced by cell phones. Look at what Amazon did to Borders. That’s the march of technology. It’s a classic disintermediation cycle. I think utilities have to embrace that, because there’s not a lot they can do about it—like bookstores and the old AT&amp;T.</p>
<p>I think DG is the future. The only question is ‘When is it coming?’ I don’t think it’s advanced enough now largely because there isn’t a storage component to it. But if you get a cheap storage solution matched up with DG—game over. You’ll see microgrids come up. </p>
<p>What does that mean for utilities? They have to reevaluate their business models. This technology is coming, and utilities need to play a role. They need to find a way to bill for their services. Volumetric billing won’t work under a DG model. </p>
<p>California will be one of the first places to see DG take off. We see rooftop solar growing at 3 percent a month in San Diego—an amazing growth rate, a phenomenal thing.</p>
<p>I see the world developing in three phases through 2050. Now we’re in phase 1. Conventional backup generation, mostly gas fired, has to be there, and we have to continue enhancing it and modernizing the grid. Then through 2030, we’ll continue to see prices decline for DG. We’ll see a storage breakthrough by then, and DG will take off. We’ll need to continue the backstop utility network. But as you march to 2050, in phase 3, you’ll see less need for the utility backstop.</p>
<p>The question really is timing. Is it 2050, or 2090? I don’t know. If the ISO isn’t needed anymore, so be it. We must not stand in the way of technology. The ISO should be in a position of facilitating the technology to the extent we can.</p>
<p>On the other hand, the grid will become more complicated with microgrids and [self-healing smart grid] technology. Keeping that all together might be a role for ISOs in the future. The whole DG convergence is an important one. I think utilities are slow to recognize the trend. The cost of utility power will continue to go up, labor expenses will go up, and the need to invest in distribution systems will go up. Everything points to upward pressure on utility rates. And everything points to declining prices on DG and storage. As those trends continue their march, the system will change, and utilities will have to think through how they bill for their product, and the role that they’ll take.</p>
</div></div></div><div class="field field-name-field-members-only field-type-list-boolean field-label-above"><div class="field-label">Viewable to All?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-article-featured field-type-list-boolean field-label-above"><div class="field-label">Is Featured?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-image-picture field-type-image field-label-above"><div class="field-label">Image Picture:&nbsp;</div><div class="field-items"><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/1306-FEA1.jpg" width="1500" height="1121" alt="" /></div></div></div><div class="field field-name-field-fortnightly-40 field-type-list-boolean field-label-above"><div class="field-label">Is Fortnightly 40?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-law-lawyers field-type-list-boolean field-label-above"><div class="field-label">Is Law &amp; Lawyers:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-above clearfix">
<div class="field-label">Tags:&nbsp;</div>
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<a href="/tags/american-electric-power">American Electric Power</a><span class="pur_comma">, </span><a href="/tags/california-iso">California ISO</a><span class="pur_comma">, </span><a href="/tags/el-paso-electric">El Paso Electric</a><span class="pur_comma">, </span><a href="/tags/aep">AEP</a><span class="pur_comma">, </span><a href="/tags/nick-akins">Nick Akins</a><span class="pur_comma">, </span><a href="/tags/entrepreneurial-culture">entrepreneurial culture</a><span class="pur_comma">, </span><a href="/tags/central-generation">central generation</a><span class="pur_comma">, </span><a href="/tags/distribution-generation">distribution generation</a><span class="pur_comma">, </span><a href="/tags/big-sandy">Big Sandy</a><span class="pur_comma">, </span><a href="/tags/construction-work-progress">Construction work in progress</a><span class="pur_comma">, </span><a href="/tags/cwip">CWIP</a><span class="pur_comma">, </span><a href="/tags/natural-gas">Natural gas</a><span class="pur_comma">, </span><a href="/tags/coal">coal</a><span class="pur_comma">, </span><a href="/tags/coal-gas">coal-to-gas</a><span class="pur_comma">, </span><a href="/tags/gas-coal-0">gas-to-coal</a><span class="pur_comma">, </span><a href="/tags/shale">Shale</a><span class="pur_comma">, </span><a href="/tags/utility-mact">Utility MACT</a><span class="pur_comma">, </span><a href="/tags/dry-sorbent">dry sorbent</a><span class="pur_comma">, </span><a href="/tags/gina-mccarthy">Gina McCarthy</a><span class="pur_comma">, </span><a href="/tags/greenhouse-gas">Greenhouse gas</a><span class="pur_comma">, </span><a href="/tags/ghg">GHG</a><span class="pur_comma">, </span><a href="/tags/waxman-markey">Waxman-Markey</a><span class="pur_comma">, </span><a href="/tags/ohio">Ohio</a><span class="pur_comma">, </span><a href="/tags/corporate-separation">corporate separation</a><span class="pur_comma">, </span><a href="/tags/bluestar">BlueStar</a><span class="pur_comma">, </span><a href="/tags/battery-technology">battery technology</a><span class="pur_comma">, </span><a href="/tags/solar">Solar</a><span class="pur_comma">, </span><a href="/tags/volt-var">Volt-VAR</a><span class="pur_comma">, </span><a href="/tags/thomas-v-shockley">Thomas V. Shockley</a><span class="pur_comma">, </span><a href="/tags/new-mexico">New Mexico</a><span class="pur_comma">, </span><a href="/tags/renewable">Renewable</a><span class="pur_comma">, </span><a href="/tags/nuclear">Nuclear</a><span class="pur_comma">, </span><a href="/tags/variability">variability</a><span class="pur_comma">, </span><a href="/tags/palo-verde">Palo Verde</a><span class="pur_comma">, </span><a href="/tags/natural-gas-fired">natural gas-fired</a><span class="pur_comma">, </span><a href="/tags/capacity-expansion">capacity expansion</a><span class="pur_comma">, </span><a href="/tags/aeroderivative">aeroderivative</a><span class="pur_comma">, </span><a href="/tags/four-corners">Four Corners</a><span class="pur_comma">, </span><a href="/tags/rate-lag">rate-lag</a><span class="pur_comma">, </span><a href="/tags/ferc">FERC</a><span class="pur_comma">, </span><a href="/tags/order-1000">Order 1000</a><span class="pur_comma">, </span><a href="/tags/western-interconnection">Western Interconnection</a><span class="pur_comma">, </span><a href="/tags/competitive-wholesale">competitive wholesale</a><span class="pur_comma">, </span><a href="/tags/non-competitive-retail">non-competitive retail</a><span class="pur_comma">, </span><a href="/tags/fort-bliss">Fort Bliss</a><span class="pur_comma">, </span><a href="/tags/net-zero">net-zero</a><span class="pur_comma">, </span><a href="/tags/emergency">emergency</a><span class="pur_comma">, </span><a href="/tags/net-metering">Net metering</a><span class="pur_comma">, </span><a href="/tags/cps-energy">CPS Energy</a><span class="pur_comma">, </span><a href="/tags/stephen-berberich">Stephen Berberich</a><span class="pur_comma">, </span><a href="/tags/caiso">CAISO</a><span class="pur_comma">, </span><a href="/tags/fleet">fleet</a><span class="pur_comma">, </span><a href="/tags/particulate-matter">particulate matter</a><span class="pur_comma">, </span><a href="/tags/over-generation">over-generation</a><span class="pur_comma">, </span><a href="/tags/diversification">diversification</a><span class="pur_comma">, </span><a href="/tags/pacificorp">PacifiCorp</a><span class="pur_comma">, </span><a href="/tags/energy-imbalance-market">energy imbalance market</a><span class="pur_comma">, </span><a href="/tags/eim">EIM</a><span class="pur_comma">, </span><a href="/tags/balancing-authorities">Balancing authorities</a><span class="pur_comma">, </span><a href="/tags/ladwp">LADWP</a><span class="pur_comma">, </span><a href="/tags/pge">PG&amp;E</a><span class="pur_comma">, </span><a href="/tags/western-electric-industry-group">Western Electric Industry Group</a><span class="pur_comma">, </span><a href="/tags/distributed-energy">distributed energy</a><span class="pur_comma">, </span><a href="/tags/rooftop-pv">rooftop PV</a><span class="pur_comma">, </span><a href="/tags/demand-response">Demand response</a><span class="pur_comma">, </span><a href="/tags/microgrids">Microgrids</a><span class="pur_comma">, </span><a href="/tags/att">AT&amp;T</a><span class="pur_comma">, </span><a href="/tags/backup-generation">backup generation</a><span class="pur_comma">, </span><a href="/tags/backstop">backstop</a> </div>
</div>
Sun, 02 Jun 2013 20:11:28 +0000meacott16625 at http://www.fortnightly.comBalance of Powerhttp://www.fortnightly.com/fortnightly/2011/05/balance-power
<div class="field field-name-field-import-deck field-type-text-long field-label-inline clearfix"><div class="field-label">Deck:&nbsp;</div><div class="field-items"><div class="field-item even"><p>Large grids can integrate more wind—without major burdens.</p>
</div></div></div><div class="field field-name-field-import-byline field-type-text-long field-label-inline clearfix"><div class="field-label">Byline:&nbsp;</div><div class="field-items"><div class="field-item even"><p>Richard Lauckhart</p>
</div></div></div><div class="field field-name-field-import-category field-type-text field-label-inline clearfix"><div class="field-label">Category:&nbsp;</div><div class="field-items"><div class="field-item even">Business &amp; Money</div></div></div><div class="field field-name-field-import-bio field-type-text-long field-label-inline clearfix"><div class="field-label">Author Bio:&nbsp;</div><div class="field-items"><div class="field-item even"><p><b>Richard Lauckhart</b> is one of the principals of Black &amp; Veatch Management Consulting’s energy market perspective forecasting service. Email him at <a href="mailto:LauckhartR@bv.com">LauckhartR@bv.com</a>.</p>
</div></div></div><div class="field field-name-field-import-volume field-type-node-reference field-label-inline clearfix"><div class="field-label">Magazine Volume:&nbsp;</div><div class="field-items"><div class="field-item even">Fortnightly Magazine - May 2011</div></div></div><div class="field field-name-field-import-image field-type-image field-label-above"><div class="field-label">Image:&nbsp;</div><div class="field-items"><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/article_images/1105/images/1105-BIZ-fig1.jpg" width="1370" height="753" alt="" /></div><div class="field-item odd"><img src="http://www.fortnightly.com/sites/default/files/article_images/1105/images/1105-BIZ-fig2.jpg" width="1376" height="955" alt="" /></div><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/article_images/1105/images/1105-BIZ-fig3.jpg" width="1372" height="951" alt="" /></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p>The desire of policymakers to add significant amounts of renewable energy to the generation mix is well understood. It’s also widely known that because the output of renewables such as wind power can be highly variable, power system operators have concerns about the ability to economically and reliably integrate these resources with system operations. Fortunately, a large body of knowledge has been developed in the last few years about integrating wind.</p>
<p>Despite their variable nature, renewable resources like wind and solar can be managed so they won’t impair the reliability of a utility system.</p>
<p>Given the diversity of resources and likelihood of improved forecasting of the output of these resources, it might be possible to reduce the need for quick-start and spinning operating reserves because the availability of the variable resources may actually offset unplanned variations in retail power demand. For this reason, it’s important that wind developers focus on working with existing balancing authorities rather than developing wind-only balancing authorities, which tend to have challenging economics.</p>
<p>Balancing authorities are the responsible entities that integrate resource plans ahead of time within specific service areas; they need to be attentive to their ability to meet control performance requirements (CPR) in the 10-minute timeframe as renewable capacity comes on line. This can be done with considerably less new investment than many market participants might think.</p>
<p>A key concern involves the basic need to maintain a balance of generation and load. Both can be subject to unexpected changes that aren’t necessarily exclusive to renewables, such as when a base-load steam plant suddenly trips off-line and 800 MW disappears, or when cold weather moves through an area 12 hours ahead of the forecast and causes an unexpected and rapid increase in power demand. While wind typically ramps down or up in unanticipated ways, it isn’t as problematic as dealing with a large generator that suddenly goes offline, and the variability of wind isn’t viewed as creating the type of frequency fluctuation problem that such an outage would cause.<i> (See sidebar “Balancing Authorities and Frequency Control.”)</i> A recent report funded by the Federal Energy Regulatory Commission (FERC) acknowledges this when it “clarifies that the events the interconnection is expected to withstand and the set points for under-frequency load shedding will not be affected by integrating variable renewable generation.”<sup>1 </sup></p>
<h4>FERC, Reliability and Renewables</h4>
<p>FERC plays a major role in the integration of renewables. The agency must approve reliability criteria, including requirements that affect their integration, and must approve tariff provisions related to open access of transmission.</p>
<p>FERC received many responses to its January 2010 Notice of Inquiry seeking comments on barriers to the integration of renewables to the grid. On Nov. 18, 2010, FERC issued a notice of proposed rulemaking in Docket RM10-11, proposing, in part, to require public utility transmission providers to offer all customers the option to schedule transmission service at 15-minute intervals instead of the current hourly scheduling procedure. This proposal, if adopted, would greatly enhance the ability of any balancing authority with limited internal flexible resources to integrate wind. The proposed rule would allow a balancing authority to look outside of its own boundaries for resources to offset unanticipated changes in wind output within a given hour. Every 15 minutes (within the hour) the balancing authority could change its intertie schedule by arranging for power supplies outside of its area to offset wind changes within its boundaries.</p>
<p>Early attempts to study the ability of a balancing authority to integrate wind required the modeling of possible future events. Now that several balancing authorities are actually integrating significant amounts of wind, the modeling can be calibrated with real-life experience. Modeling techniques vary from simple spreadsheets of 10-minute loads and resources to more elaborate dispatch models that attempt to replicate the commitment of generating units and dispatch decisions in time frames of less than one hour.</p>
<p>No matter what tool is used, the sub-hourly components are critical: forecast load, actual load, forecast wind and solar, actual wind and solar, and the resources whose output can be changed in slices of time of less than an hour’s duration. Black &amp; Veatch analyzed the wind-integration capabilities and operating reserve requirements at several entities and found important differences between large, small, and wind-only balancing authorities.</p>
<p>• <i>Large Balancing Authority:</i> This example considers a large balancing authority (peak load greater than 6,000 MW) with a minor amount of existing wind. The authority is looking to add approximately 2,500 MW of equal amounts of wind and solar generation. The study was conducted with different assumptions regarding the ability to forecast load and scheduled hourly megawatts from wind and solar.</p>
<p>The study also looked at targeting the 90 percent of allowable control performance standard (CPS) in time periods of 10 minutes (CPS2 value) and targeting a more conservative 95 percent CPS2 value.<sup>2</sup> It was understood at the outset of the study that if all of wind or solar to be added was assumed to have the same hourly pattern, then there wouldn’t be any diversity associated with the added renewables. To avoid this unrealistic result, the study considered the likely locations of wind and solar facilities and the hourly patterns of generation.</p>
<p>For purposes of forecasting load and renewables, it was assumed that forecasts would be persistence-based. A persistence-based forecast derives its forecast value for an upcoming scheduled hour from actual values in a recent historical time period. For example, a two-hour persistence load forecast would estimate the load in the next scheduling hour based on the actual load two hours before the scheduling hour commences.</p>
<p>Cases were run with two-hour and one-hour persistence-based load forecasts and two-hour persistence-based forecasts of wind and solar generation. The study allowed for the possibility that certain percentage improvements could be made in the persistence-based forecasts. For example, a two-hour forecast was assumed without any improvement. Then sensitivity analyses were performed to determine whether this two-hour persistence forecast for load, wind and solar could be improved by 10 percent and 20 percent.</p>
<p>The study first determined how much operating reserve (quick-start and spinning) would be needed to meet CPS2 requirements if the 2,500 MW of wind and solar wasn’t added. Then the study determined how much additional operating reserve (quick-start or spinning) would be needed if the 2,500 MW of renewable wind and solar was added in the balancing authority <i>(see Figure 1)</i>.</p>
<p>The tables show the incremental operating reserves needed to integrate the additional 2,500 MW of wind and solar as opposed to the amount of operating reserves needed if no additional wind and solar power was added to the balancing authority. The capacity is needed in both the upward (increasing MW) and downward (decreasing MW) direction. The results are lower than they would have been if there was no diversity in the technology or the location of the wind and solar generation. The study was done with both 90 percent and 95 percent CPS2 targets. FERC’s first level violation doesn’t occur until the CPS2 value falls below 90 percent. However, many utilities have expressed a desire to target at least 95 percent for additional safety purposes. The table shows the additional amount of operating reserves in megawatts needed when attempting to achieve the 95 percent level of performance as compared to what would be needed if shooting for the FERC-indicated level of 90 percent.</p>
<p>The negative values in Figure 1 indicate that if improvements in load forecasts are accomplished at the same time as improvements in the ability to forecast renewables, then the renewables can be added even with reductions in operating reserves and still meet CPS goals.</p>
<p>The conclusion of this study is that the additional operating reserves needed are very much influenced by the ability to forecast the renewable output as well as the CPS2 target that is desired. This study also demonstrates that the diversity of the load and the added renewables can possibly cause a reduction in the need for operating reserves in comparison to a future without any new renewables, as long as a reasonable forecast can be made of the renewable generation.</p>
<p>• <i>Wind-Only Balancing Authority:</i> Wind developers often run into difficulty in acquiring needed balancing services. Balancing authorities either claim they can’t perform the balancing services or state that if requested, they will file a tariff with FERC that has a very high charge for providing these services. As a result, wind developers occasionally consider forming their own balancing services and building gas-fired generation to accomplish the balancing.</p>
<p>Analyses performed for two such developers concluded that a wind developer can’t provide the balancing services it needs nearly as cost effectively as an existing balancing authority. First, a wind project doesn’t have retail load to include in its proposed wind-only balancing authority. Load and wind together provide a diversity that’s more effective than wind alone.</p>
<p>Second, balancing authorities generally have non-wind supplies already in place—such as resources that help meet planning reserve requirements. These assets can provide some of the operating reserves needed to perform any additional balancing services.</p>
<p>Finally, most balancing authorities are already integrating other wind and solar. As a result, the diversity of those resources coupled with the diversity of the developers’ proposed new wind plant reduces the need for new operating reserve capacity.</p>
<p>• S<i>mall Balancing Authority:</i> A small balancing authority has few resources that can be used to provide balancing needs. When asked to integrate new wind, this balancing authority asserts that it will need all new regulated resources in large amounts to integrate the wind.</p>
<p>Analysis of a small balancing authority, performed for a wind developer, concluded that the amount of operating reserve needed to integrate existing wind by the balancing authority was considerably less than what had been put in place.</p>
<p>Several insights were gained by examining the differences in the studies performed by Black &amp; Veatch and the study performed by the balancing authority. First, it wasn’t clear how the balancing authority established its final hourly interchange schedules with other balancing authorities. The balancing authority didn’t keep records of the load forecast it used when it finalized its interchange schedule. And although the balancing authority engaged a wind forecasting consultant to prepare forecasts for the scheduled hour, it didn’t use those forecasts. It wasn’t clear what forecasts the balancing authority used because it didn’t keep those records.</p>
<p>Because current FERC rules make it difficult to change intertie schedules within the operating hour, forecasting and scheduling activities that are done “before the hour” are crucial for meeting CPS2 requirements. Changing the output of resources located within a balancing authority “within the hour” in order to maintain intertie schedules is clearly allowed; regional transmission organizations and independent system operators with centralized dispatch are designed to do exactly that. The small balancing authority that was the subject of the study, however, didn’t change any of its in-area resources within the hour, thus causing it to need more regulating reserves to meet its CPS2. It isn’t clear why these changes weren’t being made within the hour consistent with its ability to do so.</p>
<p>The Black &amp; Veatch analysis of the need for regulating reserves for this small balancing authority doesn’t correspond with the balancing authority’s own study of its needs. However, both studies agree that if future additional renewables are provided from smaller plants in diversified locations, less new operating reserve will be needed than if added renewable generation comes from larger plants in more concentrated locations.</p>
<h4>Findings and Recommendations</h4>
<p>The analyses yield two recommendations to further assist and enable integration of large amounts of renewable generation into the grid.</p>
<p>First, wind developers should take a collaborative stance and work with existing balancing authorities rather than develop a wind-only balancing authority.</p>
<p>Second, balancing authorities should consider keeping records of load and wind forecasts used in actual intertie scheduling activities. These records will help the utility demonstrate that it is prudently scheduling its purchases and sales outside of its balancing authority.</p>
<p>Improvements in near-term forecasting of renewable generation output and power demand—coupled with geographic, generation and load diversity—will enable providers to integrate large amounts of wind and solar generation capacity into the grid. And providers will be able to do so in a manner that doesn’t place a large burden on the balancing authority’s ability to plan bulk power operations in its area—particularly if the FERC-proposed rule on transmission scheduling is fully adopted.</p>
<p> </p>
<h4>Endnotes:</h4>
<p>1. <i>Use of Frequency Response Metrics to Assess the Planning and Operating Requirements for Reliable Integration of Variable Renewable Generation,</i> December 2010, Lawrence Berkeley National Laboratory, LBNL-4142E, pg. 25.</p>
<p>2. Control Performance Standard (CPS) is defined as the reliability standard that sets the limits of a Balancing Authority’s control error over a specified time period. The CPS1 has a time period of one minute and CPS2 has a time period of 10 minutes. For wind projects, the CPS2 standard is more difficult to meet. For more detail on this standard, see “<a href="http://www.nerc.com/files/Reliability_Standards_Complete_Set.pdf" target="_blank">Standard BAL-001-0.1a—Real Power Balancing Control Performance</a>.”</p>
</div></div></div><div class="field-collection-container clearfix"><div class="field field-name-field-sidebar field-type-field-collection field-label-above"><div class="field-label">Sidebar:&nbsp;</div><div class="field-items"><div class="field-item even"><div class="field-collection-view clearfix view-mode-full field-collection-view-final"><div class="entity entity-field-collection-item field-collection-item-field-sidebar clearfix">
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<div class="field field-name-field-sidebar-title field-type-text field-label-above"><div class="field-label">Sidebar Title:&nbsp;</div><div class="field-items"><div class="field-item even">Balancing Authorities and Frequency Control</div></div></div><div class="field field-name-field-sidebar-body field-type-text-long field-label-above"><div class="field-label">Sidebar Body:&nbsp;</div><div class="field-items"><div class="field-item even"><!--smart_paging_autop_filter--><!--smart_paging_filter--><p>Operators of the U.S. power grid must keep the frequency at 60 Hz. If load and generation aren’t in balance, the system frequency will vary from the 60 Hz target. The frequency is generally the same across the entire interconnect no matter how many balancing authorities are in the broader grid. Some variation from 60 Hz is acceptable, but actions must be taken if the variation gets too large <i>(See Figure 2)</i>.</p><p>Automatic generation control (AGC) of regulating reserves is a tool designed to move minor deviations in frequency back toward the 60 Hz target. Larger deviations in frequency, however, raise the possibility of a reliability-based concern that might result in under-frequency load shedding or an over-frequency generator trip.</p><p>The primary tool used in the industry to ensure that the imbalance of load and power resource doesn’t cause such a reliability problem is the governor control on a generator. Much like cruise control on a car, generator governor controls monitor power system frequency and adjust the output of generators up or down if the frequency varies from 60 Hz. The Western Interconnect has a requirement that every generator provide frequency response. WECC Minimum Operating Reserve Criteria at Section 1.C.2 states: “To provide an equitable and coordinated system response to load/generation imbalances, governor droop shall be set at 5%. Governors shall not be operated with excessive deadbands, and governors shall not be blocked unless required by regulatory mandates.”</p><p>Through this rule, WECC generally has considerably more operating reserve than would otherwise be required. For example, on Aug. 25, 2010, WECC had an operating reserve requirement of about 10,000 MW, but had actual reserves of about 21,000 MW.</p><p><i>(See WECC Daily reports for Aug. 25 and 26, 2010.)</i></p><p>It might be that Eastern and ERCOT interconnects don’t require every generator to provide a governor response.</p><p>The Federal Energy Regulatory Commission (FERC), in its Notice of Inquiry in Docket RM10-11, issued on Jan. 21, 2010, sought comment on the extent to which barriers might exist that impede the reliable and efficient integration of variable energy resources (VERs) into the electric grid. The agency asked, “To what extent should all resources and VERs in particular, be required to provide frequency response?” While several responders indicated that such a requirement should be placed on all generators that have the physical capability to do so, no one answered that such a requirement already exists.</p><p>The unanticipated tripping of large steam generating plants is particularly problematic in maintaining system frequency. The North American Electric Reliability Corp. (NERC) and FERC continue to monitor the ability of the bulk power system to maintain frequency. Figure 3, with frequency in Hz on the vertical axis and time in seconds on the horizontal axis, shows typical frequency response over the 60 seconds following a unit trip in the three major interconnects in North America.</p><p>Because changes in the strength of the wind are more gradual than an event that would cause an instantaneous loss of large quantities of power, they can be dealt with via actions that are in the 10- to 30-minute time frame rather than in mere seconds. As such, the ability of a balancing authority to meet its FERC-mandated control performance standard is the key to successfully integrating wind on its system.–RL</p></div></div></div> </div>
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</div></div></div></div></div><div class="field field-name-field-article-category field-type-taxonomy-term-reference field-label-above clearfix"><h3 class="field-label">Category (Actual): </h3><ul class="links"><li class="taxonomy-term-reference-0"><a href="/article-categories/ferc">FERC</a></li><li class="taxonomy-term-reference-1"><a href="/article-categories/etrm-markets">ETRM &amp; Markets</a></li><li class="taxonomy-term-reference-2"><a href="/article-categories/wind">Wind</a></li></ul></div><div class="field field-name-field-members-only field-type-list-boolean field-label-above"><div class="field-label">Viewable to All?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-article-featured field-type-list-boolean field-label-above"><div class="field-label">Is Featured?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-department field-type-taxonomy-term-reference field-label-above clearfix"><h3 class="field-label">Department: </h3><ul class="links"><li class="taxonomy-term-reference-0"><a href="/department/business-money">Business &amp; Money</a></li></ul></div><div class="field field-name-field-image-picture field-type-image field-label-above"><div class="field-label">Image Picture:&nbsp;</div><div class="field-items"><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/article_images/1105/images/1105-BIZ.jpg" width="480" height="320" alt="" /></div></div></div><div class="field field-name-field-fortnightly-40 field-type-list-boolean field-label-above"><div class="field-label">Is Fortnightly 40?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-law-lawyers field-type-list-boolean field-label-above"><div class="field-label">Is Law &amp; Lawyers:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-above clearfix">
<div class="field-label">Tags:&nbsp;</div>
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<a href="/tags/balancing">Balancing</a><span class="pur_comma">, </span><a href="/tags/balancing-authorities">Balancing authorities</a><span class="pur_comma">, </span><a href="/tags/hour">before the hour</a><span class="pur_comma">, </span><a href="/tags/berkeley">Berkeley</a><span class="pur_comma">, </span><a href="/tags/commission">Commission</a><span class="pur_comma">, </span><a href="/tags/cpr">CPR</a><span class="pur_comma">, </span><a href="/tags/federal-energy-regulatory-commission">Federal Energy Regulatory Commission</a><span class="pur_comma">, </span><a href="/tags/federal-energy-regulatory-commission-ferc">Federal Energy Regulatory Commission (FERC)</a><span class="pur_comma">, </span><a href="/tags/ferc">FERC</a><span class="pur_comma">, </span><a href="/tags/integration">Integration</a><span class="pur_comma">, </span><a href="/tags/lawrence-berkeley-national-laboratory">Lawrence Berkeley National Laboratory</a><span class="pur_comma">, </span><a href="/tags/reliability">Reliability</a><span class="pur_comma">, </span><a href="/tags/reliability-criteria">reliability criteria</a><span class="pur_comma">, </span><a href="/tags/renewable">Renewable</a><span class="pur_comma">, </span><a href="/tags/variable">Variable</a><span class="pur_comma">, </span><a href="/tags/wind">Wind</a><span class="pur_comma">, </span><a href="/tags/wind-only-balancing-authority">wind-only balancing authority</a><span class="pur_comma">, </span><a href="/tags/within-hour">within the hour</a> </div>
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Sun, 01 May 2011 04:00:00 +0000puradmin14105 at http://www.fortnightly.comCyber Standards: FERC Asserts Its Authorityhttp://www.fortnightly.com/fortnightly/2007/08/cyber-standards-ferc-asserts-its-authority
<div class="field field-name-field-import-deck field-type-text-long field-label-inline clearfix"><div class="field-label">Deck:&nbsp;</div><div class="field-items"><div class="field-item even"><p>NERC’s first critical-infrastructure standard is now enforceable. But cyber rules await approval.</p>
</div></div></div><div class="field field-name-field-import-byline field-type-text-long field-label-inline clearfix"><div class="field-label">Byline:&nbsp;</div><div class="field-items"><div class="field-item even"><p>Christian Hamaker</p>
</div></div></div><div class="field field-name-field-import-bio field-type-text-long field-label-inline clearfix"><div class="field-label">Author Bio:&nbsp;</div><div class="field-items"><div class="field-item even"><p><b>Christian Hamaker</b> is managing editor of <i>Public Utilities Fortnightly</i>.</p>
</div></div></div><div class="field field-name-field-import-volume field-type-node-reference field-label-inline clearfix"><div class="field-label">Magazine Volume:&nbsp;</div><div class="field-items"><div class="field-item even">Fortnightly Magazine - August 2007</div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p>In the midst of a long, hot summer, North American utilities have to worry about more than the typical seasonal strain on the grid. They need to be thinking about sabotage and cyber security.</p>
<p>Never far from administrators’ minds, sabotage has taken on even more importance with the approval of the first Critical Infrastructure Protection (CIP) standard by the North American Electric Reliability Corp. (NERC). At press time, a final rule on several cyber-security standards was expected soon.</p>
<p>NERC submitted numerous reliability standards for approval to the Federal Energy Regulatory Commission (FERC), which last year certified NERC as the nation’s Electric Reliability Organization (ERO). As of June 18, 2007, 83 of the standards—including the first CIP standard <em>(see sidebar, “Standard CIP-001—Sabotage Reporting”)</em>—have been approved.</p>
<p>But what about the other CIP standards—CIP-002 through 009—which deal mainly with cyber security? Those standards, approved by NERC, are mandatory, but until FERC approves them, not enforceable. “I think that there is a misperception out there that the ERO is the nation’s reliability regulator and that the commission isn’t very involved in the process,” says Joe McClelland, director of the division of reliability at FERC. “That’s not really the legislative model. We do have independent authority to do these things … and we will be actively involved.”</p>
<h4>Cramping the ERO’s Style?</h4>
<p>Although NERC has no compliance audits scheduled for the remainder of 2007, that does not mean utilities are off the hook—either for sabotage-reporting compliance (CIP-001), or the several cyber-security mandates awaiting FERC approval. But the hardest compliance work will come after final approval of CIP-002 through 009.</p>
<p>“As far as standards go, [CIP-001] is a relatively minor standard,” says Stan Johnson, NERC manager, Situational Awareness and Infrastructure Security. “It’s not an area that we’ve had a lot of problems with within the industry, and it’s not one our compliance group is focusing on. The fact that we haven’t scheduled any audits around CIP-001 the rest of this year is more to do with [us] looking at the things that we think are really important and can clearly affect the reliability of the grid.</p>
<p>“Not to downplay CIP-001 too much, but it’s not a heavy hitter compared with some of the other standards we’re out there doing audits on.”</p>
<p>A Notice of Proposed Rulemaking (NOPR) on CIP-002 through 009 was, at press time, anticipated in the “near future,” according to FERC’s McClelland.</p>
<p>The approval of CIP-001 was part of a group of 83 reliability standards that took effect in June, while CIP-002 through 009, yet to be approved by FERC, have an implementation schedule stretching out through 2010. But for now, the full requirements of CIP-001 must be met.</p>
<p>“The industry needs to remember that these CIP-002 through 009 standards, although they are not enforceable with penalties, are mandatory with NERC, and they need to be working to implement part of this implementation schedule,” says NERC CIO Lynn Costantini. “We do expect FERC to take action on these standards in the relatively near future,” she adds.</p>
<p>Once FERC takes action on CIP-002 through 009, a NOPR and industry comment period will follow before the commission issues a final rule.</p>
<p>In issuing the first 83 reliability standards, FERC also directed the ERO and regional entities to focus on the most serious violations through the end of the current calendar year.</p>
<p>The implementation plan announced for CIP-002 through 009 remains in effect and will be watched by NERC and its regional entities. Balancing authorities, transmission-service providers, and transmission operators are expected to have begun work toward compliance on all cyber-related mandates, although auditable compliance—supported by at least 12 months of data—won’t be required until 2010, or, in some cases, 2009.</p>
<p>In announcing the advent of its CIP enforcement earlier this summer, NERC said it had prepared for June 18 by putting systems and people in place, training compliance auditors both at NERC and at its regional entities, and by establishing a compliance hotline.</p>
<p>“We are hiring people to do these audits. The regions are [hiring] also,” Johnson confirms. “Clearly, our staff has grown in the past two years from about 50 people here at NERC in Princeton, N.J., to now approaching 100. The regions have seen not quite as much growth, but they’re also adding significant staff.</p>
<p>“We’re [also] putting in a new computer system that will help us with the scheduling of these audits, the reports that will be written. We’re doing all those things to help us be a professional auditing organization.”</p>
<p>Among total new employees, about 80 percent are in NERC’s enforcement group and its readiness group, which goes out on a periodic basis and helps prepare entities for a compliance audit.</p>
<h4>Ready to Go</h4>
<p>But what if FERC were to approve NERC’s cyber standards tomorrow? Would the commission’s new staff be ready to conduct the required audits?</p>
<p>“We would be,” Johnson says, but only according to the current implementation plan, with its lesser compliance goals set for 2007 and 2008. Depending on whether a responsible entity self-certified to the requirements of NERC’s earlier standard, known as NERC 1200—applicable mostly to organizations that operated transmission control centers—the entity must have at least begun work toward compliance. As of the conclusion of the second quarter of 2007, self-certifying transmission operators, reliability coordinators, and balancing authorities are to have begun work on CIP-002 through 009, and must achieve substantial compliance for some requirements by the end of June 2008. For those entities that were not required to self-certify to NERC 1200, the threshold is only that they have begun work toward compliance with the cyber standards.</p>
<p>“The burden of proof there is nowhere near as significant as if the entity has to prove they are auditably compliant,” Johnson says of the requirements to show that a responsible entity has begun work toward compliance. “The auditor doesn’t have to be as sophisticated as they will be when they will have to determine that the entity is auditably compliant.”</p>
<p>As each entity moves toward auditable compliance, the amount of work that the auditor has to do—and that the entity has to do—increases. “We’re starting off crawling, then walking and running,” Johnson says. “By 2009 and 2010, we really have to be at the top of our game.”</p>
<p>For now, Johnson says, “We need to get these people on board, trained, some first-hand experience in what to look for and how to conduct a good audit for cyber assets.”</p>
<h4>FERC First</h4>
<p>With the federal commission keeping an eye on the industry and on the ERO, FERC wants it to be known that it can assert its independence, and its authority, at any time— although the ERO and regional entities typically initiate and conduct the investigation.</p>
<p>“The commission has a substantial role in the enforcement of CIP-001 and in fact, all of the reliability standards,” says FERC’s McClelland. “Although the ERO and the regional entities have the frontline responsibility for enforcement of the reliability standards, the commission does play a continuing and central role in enforcement matters.”</p>
<p>However, the commission wouldn’t step in and conduct its own investigation “unless it had some special reason to take this action,” he says. “If [NERC or a regional entity] gives us notice [of a violation], we can say, ‘That’s an important one,’ and send a team out. We can monitor and/or participate in the investigation, assume control of the investigation, or conduct an independent investigation. We have all those tools in our tool belt and will be using those tools as we move forward.”</p>
<p>Such oversight extends even to the possibility of accelerated implementation of the CIP-002 through 009 standards.</p>
<p>If there were a major outage prior to the approval and implementation of the remaining CIP standards, the commission “wouldn’t sit back and say, ‘Hey, that standard’s not mandatory and enforceable,’” McClelland says. “We would be prompted to action. The commission would look at the incident and consider whether implementation of the standard should be accelerated to protect the rest of the system.</p>
<p>“The commission can call for the ERO to develop and produce a standard. It can set a deadline, and it can accelerate that process if it’s in the interest of the reliability of the bulk-power system.”</p>
<p>As for what type of incident could provoke such action, McClelland responds in an open-ended fashion, suggesting that even approved standards are subject to revision if they prove to be ineffective:</p>
<p>“It could be anything. Say the proposed implementation date is 2011, and there’s a cyber-security incident that we see as a predominant threat. We could accelerate the timeline. Say it’s a new type of cyber threat that the standard didn’t contemplate. We could call for a new standard to be created by the ERO. Say it’s a standard in place, but it’s got a loophole. We could say, ‘We want a revision to this standard based on the incident that occurred.’”</p>
<p>But McClelland, after raising the possibility of FERC-imposed changes to NERC standards and enforcement, concludes with an olive branch to the ERO:</p>
<p>“All that said, the model is for the ERO and regional entities to be the first line of defense for investigating and enforcing the reliability standards. They are the frontline organizations involved in the investigations and audits. In that sense, they supplement and reinforce the commission’s central and active role in the regulation of the reliability of the bulk-power system.”</p>
</div></div></div><div class="field-collection-container clearfix"><div class="field field-name-field-sidebar field-type-field-collection field-label-above"><div class="field-label">Sidebar:&nbsp;</div><div class="field-items"><div class="field-item even"><div class="field-collection-view clearfix view-mode-full"><div class="entity entity-field-collection-item field-collection-item-field-sidebar clearfix">
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<div class="field field-name-field-sidebar-title field-type-text field-label-above"><div class="field-label">Sidebar Title:&nbsp;</div><div class="field-items"><div class="field-item even">Security Solutions in Real Time</div></div></div><div class="field field-name-field-sidebar-body field-type-text-long field-label-above"><div class="field-label">Sidebar Body:&nbsp;</div><div class="field-items"><div class="field-item even"><!--smart_paging_autop_filter--><!--smart_paging_filter--><p>Talk with vendors that provide products to secure utility plants and information systems, and the refrain is constant: It’s one thing to produce proof of intrusion or a cyber attack to auditors after the fact, but far preferable to determine a violation in real-time.</p><p>“If you’re buying video surveillance, you really ought to have some capability of alerting the operator of potential threat events,” says Craig Chambers, CEO of video analytics provider Cerenium Corp. “The real value is the ability to interdict events in real time.”</p><p>The company’s technology processes video feeds from numerous cameras, does real-time analysis, and provides alerts and viewing functions to a security operator who can more closely analyze the highlighted video feed and determine whether an event requires further action. By isolating suspicious activities across a widely monitored area—such as a utility, airport, or shopping center—security personnel aren’t overwhelmed by the scope of the monitoring task.</p><p>“There is a physiological effect where humans actually zone out,” Chambers says. “You can stare at a monitor for 10 or 12 minutes, and after a while, you’re really not seeing anything that’s going on in it.”</p><p>On the other hand, watching video feeds sent back to a central location for analysis may be too little, too late for the utility. “You might as well just be recording the event for viewing after the crime has occurred,” Chambers says. “The chances of a single human, or even dozens, watching a feed and seeing an event is miniscule.”</p><h4>Intrusion Records vs. Intrusion Prevention</h4><p>For utility information systems, security logs are paramount. Just as investigators of aviation accidents often look to a plane’s “black box” recorder for details of what went wrong before a destructive event, utility-system record logs need to be preserved for audits.</p><p>The Compliance Manager from Hewlett-Packard does just that, according to Gary Lefkowitz, product marketing director, Enterprise Storage and Security Solutions. “Our technology adds trust and assurance to audit-log records, which have been easily spoofable, easily altered,” he says. How? By allowing the logs to be digitally signed and encrypted, with additional integrity checking for each record. “Now the data becomes actionable and is useful for digital evidence,” Lefkowitz says. “It’s like putting it in a vault.”</p><p>Intellitactics, based in Reston, Va., notes that CIP is just the latest regulatory standard to which utilities are subject. The company’s Security Manager, designed for companies with a report-oriented workflow, generates those required reports, and allows alerts in real time, while also incorporating different regulatory demands.</p><p>“If [the utility is] a public company, it is impacted by SOX; if it takes payment by credit card it’s impacted by PCI; if it’s self-insured it’s impacted by HIPAA; if it manages its employees’ retirement, it’s impacted by GLB. The latest is NERC,” says Sunil Bhargava, vice president of product management at the company.</p><p>“Our focus is on the information-security aspect of the standards. NERC talks about taking standard precautions that any good regulation would demand in terms of monitoring access, monitoring activity that is anomalous, and having processes in place to react to these. We provide the software solution that enables and supports the processes.”–CAH</p></div></div></div> </div>
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</div></div><div class="field-item odd"><div class="field-collection-view clearfix view-mode-full field-collection-view-final"><div class="entity entity-field-collection-item field-collection-item-field-sidebar clearfix">
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<div class="field field-name-field-sidebar-title field-type-text field-label-above"><div class="field-label">Sidebar Title:&nbsp;</div><div class="field-items"><div class="field-item even">Standard CIP-001&amp;mdash;Sabotage Reporting</div></div></div><div class="field field-name-field-sidebar-body field-type-text-long field-label-above"><div class="field-label">Sidebar Body:&nbsp;</div><div class="field-items"><div class="field-item even"><!--smart_paging_autop_filter--><!--smart_paging_filter--><h4>Requirements</h4><p><strong>R1.</strong> Each Reliability Coordinator, Balancing Authority, Transmission Operator, Generator Operator, and Load-Serving Entity shall have procedures for the recognition of, and for making, their operating personnel aware of sabotage events on its facilities and multi-site sabotage affecting larger portions of the Interconnection.</p><p><strong>R2.</strong> Each Reliability Coordinator, Balancing Authority, Transmission Operator, Generator Operator, and Load-Serving Entity shall have procedures for the communication of information concerning sabotage events to appropriate parties in the Interconnection.</p><p><strong>R3.</strong> Each Reliability Coordinator, Balancing Authority, Transmission Operator, Generator Operator, and Load-Serving Entity shall provide its operating personnel with sabotage response guidelines, including personnel to contact, for reporting disturbances due to sabotage events.</p><p><strong>R4.</strong> Each Reliability Coordinator, Balancing Authority, Transmission Operator, Generator Operator, and Load-Serving Entity shall establish communications contacts, as applicable, with local Federal Bureau of Investigation (FBI) or Royal Canadian Mounted Police (RCMP) officials and develop reporting procedures as appropriate to their circumstances.</p><h4>Measures</h4><p><strong>M1.</strong> Each Reliability Coordinator, Balancing Authority, Transmission Operator, Generator Operator, and Load-Serving Entity shall have and provide upon request a procedure (either electronic or hard copy) as defined in Requirement 1.</p><p><strong>M2.</strong> Each Reliability Coordinator, Balancing Authority, Transmission Operator, Generator Operator, and Load-Serving Entity shall have and provide upon request the procedures or guidelines that will be used to confirm that it meets Requirements 2 and 3.</p><p><strong>M3.</strong> Each Reliability Coordinator, Balancing Authority, Transmission Operator, Generator Operator, and Load-Serving Entity shall have and provide upon request evidence that could include, but is not limited to procedures, policies, a letter of understanding, communication records, or other equivalent evidence that will be used to confirm that it has established communications contacts with the applicable, local FBI or RCMP officials to communicate sabotage events (Requirement 4).</p><h4>Compliance</h4><p>1. Compliance Monitoring Process</p><p>1.1. Compliance Monitoring Responsibility</p><p>Regional Reliability Organizations shall be responsible for compliance monitoring.</p><p>1.2. Compliance Monitoring and Reset Time Frame</p><p>One or more of the following methods will be used to verify compliance:</p><p>• Self-certification (Conducted annually with submission according to schedule.)</p><p>• Spot Check Audits (Conducted anytime with up to 30 days notice given to prepare.)</p><p>• Periodic Audit (Conducted once every three years according to schedule.)</p><p>• Triggered Investigations (Notification of an investigation must be made within 60 days of an event or complaint of noncompliance. The entity will have up to 30 days to prepare for the investigation. An entity may request an extension of the preparation period and the extension will be considered by the Compliance Monitor on a case-by-case basis.)</p><p>The Performance-Reset Period shall be 12 months from the last finding of noncompliance.</p><p>1.3. Data Retention</p><p>Each Reliability Coordinator, Transmission Operator, Generator Operator, Distribution Provider, and Load-Serving Entity shall have current, in-force documents available as evidence of compliance as specified in each of the Measures.</p><p>If an entity is found non-compliant the entity shall keep information related to the non-compliance until found compliant or for two years plus the current year, whichever is longer.</p><p>Evidence used as part of a triggered investigation shall be retained by the entity being investigated for one year from the date that the investigation is closed, as determined by the Compliance Monitor.</p><p>The Compliance Monitor shall keep the last periodic audit report and all requested and submitted subsequent compliance records.</p></div></div></div> </div>
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</div></div></div></div></div><div class="field field-name-field-article-category field-type-taxonomy-term-reference field-label-above clearfix"><h3 class="field-label">Category (Actual): </h3><ul class="links"><li class="taxonomy-term-reference-0"><a href="/article-categories/security-reliability-cip">Security, Reliability &amp; CIP</a></li></ul></div><div class="field field-name-field-members-only field-type-list-boolean field-label-above"><div class="field-label">Viewable to All?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-article-featured field-type-list-boolean field-label-above"><div class="field-label">Is Featured?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-image-picture field-type-image field-label-above"><div class="field-label">Image Picture:&nbsp;</div><div class="field-items"><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/article_images/0708/images/0708-FEA2.jpg" width="1500" height="871" alt="" /></div></div></div><div class="field field-name-field-fortnightly-40 field-type-list-boolean field-label-above"><div class="field-label">Is Fortnightly 40?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-law-lawyers field-type-list-boolean field-label-above"><div class="field-label">Is Law &amp; Lawyers:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-above clearfix">
<div class="field-label">Tags:&nbsp;</div>
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<a href="/tags/balancing">Balancing</a><span class="pur_comma">, </span><a href="/tags/balancing-authorities">Balancing authorities</a><span class="pur_comma">, </span><a href="/tags/cip">CIP</a><span class="pur_comma">, </span><a href="/tags/commission">Commission</a><span class="pur_comma">, </span><a href="/tags/cost">Cost</a><span class="pur_comma">, </span><a href="/tags/federal-energy-regulatory-commission">Federal Energy Regulatory Commission</a><span class="pur_comma">, </span><a href="/tags/federal-energy-regulatory-commission-ferc">Federal Energy Regulatory Commission (FERC)</a><span class="pur_comma">, </span><a href="/tags/ferc">FERC</a><span class="pur_comma">, </span><a href="/tags/infrastructure">Infrastructure</a><span class="pur_comma">, </span><a href="/tags/nerc">NERC</a><span class="pur_comma">, </span><a href="/tags/nopr">NOPR</a><span class="pur_comma">, </span><a href="/tags/north-american-electric-reliability-corp-0">North American Electric Reliability Corp.</a><span class="pur_comma">, </span><a href="/tags/reliability">Reliability</a><span class="pur_comma">, </span><a href="/tags/reliability-standards">reliability standards</a><span class="pur_comma">, </span><a href="/tags/security">Security</a> </div>
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Wed, 01 Aug 2007 04:00:00 +0000puradmin13911 at http://www.fortnightly.com